Complaint No C49654 [2023] NZREAA 92 (30 November 2023)

Last Updated: 14 April 2024

BEFORE THE COMPLAINTS ASSESSMENT COMMITTEE

Committee: CAC2204

Complaint: C49654

A complaint under section 74 of the Real Estate Agents Act 2008 by The Complainant

against The Licensee [XXXXXXXX]

DECISION OF THE COMMITTEE

Dated 30 November 2023

COMPLAINTS ASSESSMENT COMMITTEE

Chairperson: Denise Evans

Deputy Chairperson: Belinda Moss

Panel Member: Julian Twiss

V202309

HOW THE COMPLAINT AROSE

1. The Licensee was the listing agent for the property (the Property) purchased by The Complainant.
   
2. The Complainant believes that she overpaid for the Property because The Licensee gave her misleading information that induced her to increase her offer for the Property.
   

THE COMPLAINT

3. Against this background, The Complainant complains that:
   
   1. The Licensee stated negotiations between the vendor and the tenant had reached an “an principle” agreement for the tenants to vacate the Property early, but this was untrue and dishonest.
      
   2. The Licensee pressured her to increase her offer by $5,000.00 using information he knew to be untrue.
      

THE ISSUES

4. On 20 March 2023 Complaints Assessment Committee CAC2301 considered the complaint and decided to inquire into it under section 79(2)(e) of the Real Estate Agents Act 2008 (the Act).
   
5. On 2 October 2023 the complaint was transferred to this Complaints Assessment Committee CAC2204 (the Committee) and the Committee confirmed the decision to inquire made by CAC2301.
   
6. The issues under inquiry are that:
   
   1. The Licensee stated negotiations between the vendor and the tenant had reached an “in principle” agreement for the tenants to vacate the Property early, but this was untrue and dishonest.
      
   2. The Licensee pressured The Complainant to increase her offer by $5,000.00 using information he knew to be untrue.
      

CONSIDERATION OF THE ISSUES

Did The Licensee act untruthfully and dishonestly when he advised The Complainant that the vendor and the tenants had reached an “in principle” agreement for the tenants to vacate the Property?

7. The Property was listed for sale subject to a fixed term tenancy.
   
8. The Complainant wanted to buy the Property with vacant possession as she was unable to access all of her KiwiSaver funds if the Property was tenanted.
   
9. The Complainant’s initial offer of $445,000.00 (conditional on vacant possession) was not accepted by the vendor.

10. The Licensee advised that the vendor would not accept less than $465,000.00 for the Property. The Complainant then increased her offer to $465,000.00 (also conditional on vacant possession).
    
11. The Complainant understood from The Licensee that acceptance of her increased offer was delayed while the vendor was negotiating an early termination of the tenancy.
    
12. Subsequently The Complainant was advised that agreement could not be reached with the tenants with The Licensee suggesting that she view other properties in the complex also owned by the vendor.
    
13. Some weeks later The Licensee advised The Complainant that the vendor had reached an “in principle” agreement with the tenants who would agree to terminate the tenancy early in return for a monetary payment. The Licensee also advised that the vendor had increased the asking price for the Property to $470,000.00 because of the costs associated with the early termination of the tenancy.
    
14. A few days later The Complainant was advised that agreement had not been reached with the tenants. The vendor wanted $470,000.00 for the Property and would not negotiate on price.
    
15. After purchasing the Property The Complainant was advised by the tenants that there had not been any ongoing negotiations for the termination of their tenancy. The tenants told The Complainant that they had one phone call from the manager of the Property enquiring as to whether they would consider early termination of the tenancy which they declined as they had only been in the Property for a couple of months, the city was in a COVID-19 lockdown and they had previously been assured that they could remain in the Property for the full term of the tenancy.
    
16. The Complainant believes that The Licensee mislead her into believing that the tenants had agreed to terminate their tenancy when he knew that this was not true.
    
17. Whilst the tenants later told The Complainant that they were not interested in moving and there were no negotiations with the property manager or the vendor there is no evidence that The Licensee had any involvement in discussions that did or did not take place between the vendor, his property manager and the tenants.
    
18. This has been confirmed by both the property manager and the tenants who say that their only involvement with The Licensee was in relation to the listing of the Property not the tenancy. The vendor also says the dealings with the tenant were dealt with mostly by the property manager on his behalf.
    
19. The Licensee says that he did not make anything up or act dishonestly but was simply passing on advice that he had received from the vendor. The Licensee has explained that his use of the words “in principle” were intended to convey that a general understanding had been reached but the terms and conditions were not finalised.
    
20. The Committee notes that after The Licensee advised that an “in principle” agreement had

been reached he then prepared an agreement for sale and purchase that was conditional on

termination of the tenancy. This, in the Committee’s view is consistent with The Licensee’s evidence that his conversations with the vendor had led him to believe that negotiations with the tenants were ongoing.

21. The Committee has considered The Licensee’s conduct having regard to his obligations under rule 5.1 (a licensee must exercise skill, care, competence and diligence) and rule 6.4 (a licensee must not mislead, provide false information or, withhold information).
    
22. The Committee is satisfied that The Licensee was passing on information that he says that he had received from the vendor. This was confirmed to The Complainant when The Licensee advised that he was “stuck in the middle as the messenger” and could only “pass on information that he was getting from the vendor”.
    
23. The Committee is also satisfied that there is no evidence that The Licensee had any direct contact with the property manager or the tenants about the tenancy and nor is there any other evidence that would corroborate The Complainant’s allegation that The Licensee knew that the tenants had not agreed to terminate their tenancy but withheld this information from her.
    
24. The Committee therefore finds no breach of rule 5.1 or 6.4 and has determined to take no further action concerning this aspect of the complaint pursuant to section 89(2)(c) of the Act.
    

Did The Licensee pressure The Complainant to increase her offer by $5000.00 using information he knew to be untrue?

25. The Complainant believes that The Licensee used the expenses of the “in principle” agreement to pressure her to increase her offer for the Property by $5,000.00. The Complainant says that whether the vendor requested an extra $5,000.00 for the Property is irrelevant because the way in which The Licensee sought to secure the extra $5,000.00 was dishonest and a clear breach of rule 6.4.
    
26. The Complainant says that she agreed to purchase at the increased price of $470,000.00 after being advised that an “in principle” agreement had been reached with the tenants. She says the “in principle” agreement then conveniently fell through once she had decided to proceed.
    
27. After she was told that agreement had not been reached with the tenants The Complainant having considered her options and after viewing other properties owned by the vendor advised that she was still interested in the Property.
    
28. As she was purchasing subject to the tenancy The Complainant wanted to offer $465,000.00 for the Property.
    
29. The Licensee says this offer was declined by the vendor. He says that the vendor advised that regardless of the tenancy situation he wanted $470,000.00 for the Property and said that if The Complainant did not want to pay $470,000.00 he would instruct The Licensee to re-market the Property at $489,000.00. This is corroborated by the correspondence provided in evidence.

30. The Licensee says that The Complainant was unhappy with the vendor’s response. He says that he explained to her that as there was no signed agreement the vendor was entitled to change his mind at any time and that he (The Licensee) was unable to dictate to the vendor what he should sell the Property for.
    
31. The Complainant then contacted The Licensee’s manager as she wanted to confirm that The Licensee was relaying the correct message from the vendor. The Licensee says that his manager confirmed that it was the vendor’s decision as to how much he wanted to sell for and, neither The Licensee nor his manager had any control over this.
    
32. The Licensee says that it was made clear to The Complainant that the increased asking price of $470,000.00 was because the vendor had changed his mind about how much he wanted for the Property and, this had nothing to do with the tenancy. Ultimately, when The Complainant decided to purchase The Licensee says that she did so with complete knowledge that she was paying $470,000.00 and buying subject to the tenancy. He says there was no pressure from him.
    
33. The Committee has considered The Licensee’s conduct in the context of The Licensee’s obligations under rule 6.4 (a licensee must not mislead, provide false information or, withhold information) and rule 6.2 which required The Licensee to act in good faith and deal fairly with all parties engaged in the transaction.
    
34. Whilst The Complainant believes that The Licensee acted dishonestly in the way in which the price increase was achieved and says The Licensee pressured her to increase her offer by using information that was untrue this allegation is not supported by the evidence. It is clear to the Committee that when she made her final offer for the Property The Complainant understood the terms and the price that she would need to pay if she wanted to purchase the Property. The Committee is therefore satisfied the Licensee did not mislead The Complainant, provide false information or, withhold information in breach of rule 6.4.
    
35. The Committee also finds no evidence that The Licensee failed to act in good faith or deal fairly with The Complainant.
    
36. Whilst The Complainant says that she was led on unnecessarily for one month so that The Licensee an could increase the asking price, after reviewing the timeline of events and the correspondence over that period and having regard to the fact that there was a COVID-19 lockdown at the time the Committee finds no evidence of any conduct by The Licensee that caused or contributed to any delay in concluding an agreement.
    
37. It is also clear from the evidence that the price increase was made solely at the instigation of the vendor not The Licensee.
    
38. The Committee is therefore satisfied that throughout the transaction The Licensee was acting on the instructions of his vendor client. The Committee observes that had he not done so The Licensee would have been in breach of his obligation under rule 9.1 which required him to act in accordance the vendor’s instructions.

39. Whilst The Licensee owed fiduciary obligations to his vendor client and was required to act in accordance with his instructions the Committee is nevertheless satisfied that The Licensee did not fail in his obligation to act in good faith or deal fairly with The Complainant.
    
40. The correspondence provided to the Committee indicates that The Licensee was working hard to conclude an agreement that would be acceptable to both The Complainant and his vendor client and that both The Licensee and his manager (who became involved at the request of The Complainant) tried to persuade the vendor to lower his price for the Property. The Committee also notes that the correspondence at this time indicates that The Complainant’s concerns that she was not getting a fair deal and was being “strung along” by the vendor were allayed.
    
41. Having concluded that The Licensee did not fail to act in good faith and deal fairly, mislead or provide false information regarding the increase in the asking price for the Property the Committee has determined to take no further action concerning this aspect of the complaint pursuant to section 89(2)(c) of the Act.
    

THE OUTCOME

42. The Committee has made the following findings:
    
    1. No further action will be taken in relation to all aspects of the complaint against The Licensee under s89(2)(c) of the Real Estate Agents Act 2008 (Act).
       

PROVISIONS OF THE ACT AND RULES REFERRED TO

43. The provisions of the Act and the Rules referred to in this decision are set out in the Appendix.
    

PUBLICATION

44. The Committee directs publication of its decision. The decision will be published without the names or identifying details of the complainant, The Complainant (including the address of the Property), any third parties and the licensee, The Licensee.
    

RIGHT TO APPEAL

45. If you are affected by this decision of the Committee, the right to appeal is set out in section 111 of the Act. You may appeal in writing to the Tribunal within 20 working days after the date notice is given of this decision.
    
46. Your appeal must include a copy of this decision and any other information you wish the Tribunal to consider in relation to the appeal. The Tribunal has the discretion to accept a late appeal filed within 60 working days after the date notice is given of this decision, but only if it is satisfied that exceptional circumstances prevented the appeal from being made in time.
    
47. The Notice of Appeal form, which includes information on filing an appeal and the prescribed fee can be located on the Ministry of Justice’s website: https://www.justice.govt.nz/tribunals/real-estate-agents/apply/.

Signed

Chairperson: Denise Evans

Deputy Chairperson: Belinda Moss

Panel Member: Julian Twiss

Date: 30 November 2023

APPENDIX: PROVISIONS OF THE ACT AND RULES REFERRED TO

The Real Estate Agents Act 2008 provides:

78. Functions of Committees

The functions of each Committee are—

(a) to inquire into and investigate complaints made under section 74:
(b) on its own initiative, to inquire into and investigate allegations about any licensee:
(c) to promote, in appropriate cases, the resolution of complaints by negotiation, conciliation, or mediation:
(d) to make final determinations in relation to complaints, inquiries, or investigations:
(e) to lay, and prosecute, charges before the Disciplinary Tribunal:
(f) in appropriate cases, to refer the complaint to another agency:
(g) to inform the complainant and the person complained about of its decision, reasons for the decision, and appeal rights:
(h) to publish its decisions.

79. Procedure on receipt of complaint
    • (1) As soon as practicable after receiving a complaint concerning a licensee, a Committee must consider the complaint and determine whether to inquire into it.
    • (2) The Committee may—
      • (a) determine that the complaint alleges neither unsatisfactory conduct nor misconduct and dismiss it accordingly:
      • (b) determine that the complaint discloses only an inconsequential matter, and for this reason need not be pursued:
      • (c) determine that the complaint is frivolous or vexatious or not made in good faith, and for this reason need not be pursued:
      • (d) determine that the complaint should be referred to another agency, and refer it accordingly:
      • (e) determine to inquire into the complaint.
        

89 Power of Committee to determine complaint or allegation

(1) A Committee may make 1 or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.
(2) The determinations that the Committee may make are as follows:

• (a) a determination that the complaint or allegation be considered by the Disciplinary Tribunal:
• (b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:
• (c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a decision under section 80 with regard to a complaint.

111 Appeal to Tribunal against determination by Committee

(1) A person affected by a determination of a Committee may appeal to the Disciplinary Tribunal against the determination within 20 working days after the day on which notice of the relevant decision was given under section 81 or 94, except that no appeal may be made against a determination under section 89(2)(a) that a complaint or an allegation be considered by the Disciplinary Tribunal.

(1A) The Disciplinary Tribunal may accept a late appeal no later than 60 working days after the day on which notice was given to the appellant if it is satisfied that exceptional circumstances prevented the appeal from being made in time.

(2) The appeal is by way of written notice to the Tribunal of the appellant’s

intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and (ab) the prescribed fee, if any; and

• (b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(3) The appeal is by way of rehearing.
(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.
(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.

The Rules from the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012 referred to in this decision are:

5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.

9.1 A licensee must act in the best interests of a client and act in accordance with

the client’s instructions unless to do so would be contrary to law.